Davos Billionaires See Wealth Gains on 2014 Stocks RallyMatthew G. Miller and Tom Metcalf
Billionaires attending the World Economic Forum’s annual meeting this week in Davos, Switzerland, expect to be richer when they return to the Alpine village next year.
About a half-dozen of the wealthiest participants, including Aliko Dangote, Africa’s richest person, and Irish telecommunications mogul Denis O’Brien, said stocks will rise, interest rates will remain low and they’d avoid investing in the virtual currency Bitcoin in 2014.
“The bull market will continue, we’ve actually turned the corner,” Dangote said in an interview at the forum’s Congress Centre last night. “I believe it’s going to be a whole new ballgame. Things are improving in all sectors: in banking, in vehicle manufacturing, almost all the sectors. And I think we’ve left the bad past behind.”
Dangote is one of at least 80 billionaires joining more than 2,500 business and political leaders in Davos this week, according to a list of attendees and promotional materials obtained by Bloomberg News.
As billionaires bet on accelerating growth and rising asset prices, income inequality is emerging as a key theme for this week’s annual meeting. A study released last week by the forum identified the income gap as the most probable menace to the global economy during the next decade. Wealth disparity -- driven by globalization and the recent financial crisis -- threatens to breed poverty and social disorder, it said.
The wealthiest people on the planet got even richer last year, adding $524 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 wealthiest individuals. The aggregate net worth of the world’s top billionaires stood at $3.6 trillion at the market close yesterday, according to the ranking.
A study by UBS AG economist Paul Donovan last month found that pretax income of the top one percent of Americans amounts to about 20 percent of all U.S. income, which is comparable with levels in the early 20th century.
Using Gini coefficients to measure income inequality, Donovan found those for the U.S., U.K., Japan, France and Canada have each risen since 2005.
Bill Gates, the founder and chairman of Redmond, Washington-based Microsoft Corp., was last year’s biggest gainer. The 58-year-old tycoon’s fortune increased by $15.8 billion to $78.5 billion, and recaptured the title of world’s richest person last May from Mexican investor Carlos Slim.
Bridgitt Arnold, a spokeswoman for Gates, said he declined to participate in the Bloomberg survey.
“People should feel great about the arrow of time but feel bad that we’re not doing more,” Gates said yesterday in a Bloomberg Television interview with Betty Liu. “Headlines in a way are what mislead you because bad news is a headline and gradual improvement is not.”
Denis O’Brien, the chairman of Hamilton, Bermuda-based Digicel Group Ltd., the largest telecommunications company in the Caribbean, said he was bullish on equities.
“I’m going to stick with global telecom stocks,” the 55-year-old billionaire said in an e-mail. “I’m comfortable that the equity markets will continue to be better over time with increasing value and dividends.”
O’Brien has attended Davos for more than a decade and flew in last year on his Gulfstream 550 jet plane for the event’s penultimate day. He said if he had $100 million to invest, he would bet $40 million on Vodafone Group Plc, $20 million in Bharti Airtel Ltd., $20 million in SoftBank Corp, and $20 million in Bangkok-based Advanced Info Service Pcl.
“I am positive about 2014, but it will not be like 2013 in terms of S&P 500 index gains,” he said. “The stock market will be up due to better global earnings and consumers doing better. Consumers are recovering their appetite for goods, as they are only now emerging from their version of the debt crisis.”
O’Brien said the biggest hurdle facing the global economy are politicians.
“They are more and more worried about their re-election than growing their economies,” he said. “Also, certain European Banks still have issues particularly in the Benelux region, Spain, Italy, France and Germany. It will take many more years to sort them out.”
Vladimir Evtushenkov, the founder and largest shareholder of Moscow-based investment company AFK Sistema, said he wasn’t sure if stocks would rise this year.
“For many stocks in general and for AFK Sistema, particularly, 2013 was not a bad year, I am very cautious about their short-term growth prospects,” he said in an e-mail.
Evtushenkov, who’s the world’s 132nd-richest person, according to the Bloomberg ranking, said he would prefer to invest in new companies in sectors that are not affected by changes in central bank policies.
The 65-year-old billionaire, whose publicly traded company maintains interests in OAO Mobile TeleSystems, Russia’s biggest mobile-phone operator, and OAO Bashneft, an oil production and refining company, said the biggest risk to the world’s economy are anti-global attitudes.
“The opponents of globalization are becoming stronger,” he said. “In many countries, we see the growth of nationalist sentiments, which causes serious damage to the sustainable development of the whole world’s economy.”
Enrique Razon, a casino and cargo terminal billionaire who doesn’t gamble and says he feels more comfortable operating a port crane than he does glad-handing a crowd of high-rollers, said he’d invest $100 million in Nigerian companies instead of stocks, Picasso paintings or Bitcoins.
“I believe there will be a correction coming” in the stock market, he said in an e-mail. “I’m not certain if this will happen in 2014.”
The Filipino billionaire funneled $200 million of his own money into the Solaire Resort & Casino, a $1.2 billion gambling complex with 1,200 slot machines and 300 gaming tables that opened last March. He also owns half of International Container Terminal Services Inc., a port operator with facilities stretching from Brazil to Madagascar to India, which he inherited when his father died in 1995.
The billionaire said the biggest challenge facing the global economy is “liquidity,” and that central banks will not be able to keep interest rates at their low rates for the year.
“I hope to network and update myself on regional and global issues,” he said of his second time at the WEF annual meeting.
Billionaire Adi Godrej, 71, agreed interest rates would rise “somewhat in the developed world,” though he expects them to “come down in the developing world.”
Godrej, who has visited Davos for more than 20 years, forecast that the bull market in stocks would continue. His family’s holdings, which include real estate and consumer goods, had revenue of $4.1 billion in the year ended March 2013 and are used by more than half a billion Indians every day.
His cousin, Jamshyd Godrej, crossed paths with Bajaj Auto Ltd. chairman Rahul Bajaj at last year’s meeting, one of many meetings among the 17 Indian billionaires in attendance, topped only by the U.S. contingent last year.
Nineteen Indian billionaires are expected at the gathering in 2014. The 75-year-old Bajaj won’t be among them. After coming to Davos for 35 years, he said in an e-mail to Bloomberg News that he won’t be making the trip this week.
“I see the bull market continuing,” billionaire Malvinder Singh, executive chairman of New Delhi-based Fortis Healthcare Ltd., India’s second-biggest hospital operator, said in an e-mail. “Interest rates will continue to remain low through 2014 as economies work out ways of kick-starting recovery by boosting demand.”
The 41-year-old, who has been coming to Davos for more than a decade, said he attends the WEF “to interact with some of the finest minds from around the world and get a great sense as to what is on top of their minds.”
Agustin Coppel Luken, the chairman and CEO of closely held Coppel SA, Mexico’s fifth-largest retailer, said the Standard & Poor’s 500 index would “remain in good shape.”
“Everything indicates that international interest rates will remain at a low level,” he said in an e-mail. “If the economy continues growing, companies will have the proper conditions for good results.”
Coppel splits a fortune valued at more than $17 billion, according to the Bloomberg ranking, with his four brothers, Enrique, Ruben, Alberto and Jose. The siblings also have interests in a bank, a retirement-fund manager and real estate. Their department store chain has 1,000 stores across Mexico offering appliances, clothing, perfumes and electronics to low-income consumers.
The billionaire, who is coming to Davos for the fifth time, said the biggest hurdle facing the global economy are U.S. politicans.
“Undoubtedly, the main hurdle is the Congress,” he said. “It´s irresponsible to run a government with such deficit and high level of public debt. A change is urgently needed.”
Torbjorn Tornqvist, chief executive officer of oil trader Gunvor Group Ltd., said he would continue to invest in stocks in 2014, targeting underperforming sectors, such as natural resources.
“The oil and mining sectors have been very weak,” he said. “I prefer to invest when market expectations are low, because when these opportunities turn, they turn quickly.”
The Swede founded Gunvor in 2000 with fellow billionaire Gennady Timchenko. The company is the fifth-largest independent commodity trader based on its full-year 2012 revenue of $93 billion. For Tornqvist, China poses the biggest risk to the global economy in 2014.
“China is the big question,” he said. “Will it perform as expected? Growth rates could be lower than generally anticipated due to credit and debt issues, which could have wider consequences for the Asia region.”
Like Singh, he said he expects the forum will spark new investment ideas.
“I go to Davos to get some distance from my own business and hopefully come away with some new ideas,” he said. “Davos provides a good stimulus for visionary and strategic thinking.”